Following today’s Fed minutes release, Jeff Gundlach had a far less “uncertain” message: “Things are shaky and feeling dangerous,” Gundlach told Reuters in a telephone interview.
It’s not just stocks that Gundlach was not too excited about, he also had some choice words about buying Treasuries here. “You’re seeing people who hated the ‘2 percent’ 10-year suddenly loving it at a 1.38-1.39 percent revisit of the all-time low closing yield,” Gundlach said. “If you buy 10-year Treasuries now, I would say, it is a terrible trade location. In fact, it is the worst trade location in the history of the 10-year Treasury.”
True, just like buying stocks less than 2% from all time highs, however what Gundlach failed to mention is that those who are buying Treasurys here are not doing it for the yield (or lack thereof on more than $11 trillion in notional), they are simply doing so to frontrun even more central bank purchases now that the monetary spigots have once again been activated as “confused” central banks around the world have just one trick left up their sleeve – to monetize even more debt in hopes of pushing every last investor into risk assets.
The DoubleLine bond king also had some choice words about Europe’s banking crisis: “Banks are dying and policymakers don’t know what to do,” Gundlach said. “Watch Deutsche Bank shares go to single digits and people will start to panic… you’ll see someone say, ‘Someone is going to have to do something’.“
So Gundlach hates equities and bonds; what does he like? According to Reuters’ Jennifer Ablan, Gundlach said that “gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation, as well as concerns over the effectiveness of central bank policies.”
Gundlach, a staunch supporter of the precious metal, sees gold rising to $1400 an ounce this year.
“I am not selling gold.”
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